Chapter 3Is Compliance Worth the Money?

Bolt pulls up the ladder, secures the hatch.

—Simon Armitage, “Last Day on Planet Earth,” in Seeing Stars (London: Faber and Faber, 2010)

An Unfortunate Unconformity

Compliance has not had a happy record since 2008. This is partly because the apparent development in compliance and regulation into stage 4 of the General Model may have been superficial and not properly embedded. Also other firms and regulators were either complacent or comfortable in stage 3 and had failed to improve. In general, where regulators had been trying to press forward into stage 4, such as the UK's Treating Customers Fairly (TCF) initiative, compliance may not have had the frame of reference to have really got it, and so were unable to keep in step with changing regulatory expectations. This created an unstable unconformity between pioneering regulators and compliance. This is a high-risk situation for a regulatory and compliance system.

This unconformity may have left compliance looking somewhat bewildered and embarrassed. Remedial actions have also seemed hasty and superficial, rather than embedded. So, despite regulation beginning to enter stages 4 and 5, the compliance results in the same period have been uncertain and fragile—as 2008 unearthed. It is reasonable to assume that development in compliance needs to progress further and faster, as Part II suggests, as some firms start from a position well behind the curve. Compliance must play catchup. But before ...

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